Rob Is Using A Different Strategy For Tomorrow’s Trade. Here It Is!

Welcome back gang. We are going to try to do the best that we can with this video tonight but it has been a long couple of day being a little bit ill and it’s gotten a little bit worse now. We are going to do the best we can for you tonight. Let’s focus first on what we need to see for a couple of key instruments that we are watching going into tomorrow.

First of all, you will recall in gold I’ve been looking for a break out above this key area here (on my charts at 0:39). We got that break out and the initial area was right here and the secondary area was here (marked on my charts). Now what I am looking for is if we can maintain it. We have what we call a hockey stick sell signal right now on my stochastic indicator. Typically, what happens the next day after this is that it will come down. I am a little bit concerned about that. I will be a little guarded walking in the door tomorrow for the long side trade. Overall, other than the fact that gold is rising at the same time the market is rising, I’m very interested in looking for continued long gold trades. I’m more focused on gold in some ways because of that story about gold and the stock indices rising at the same time. They usually have an inverse relationship because of the flight to safety factor. When the stock index futures are looking shaky gold will usually rally. Once people have that confidence that the market is in great shape the markets will start to rally and gold will fall back.

We can see right now they aren’t correlated properly so we are waiting for a message from the market about that. If we can get above some key resistance that is right above us here (on my charts at 1:51) we have a lot of room back to the upside. We are going to be focusing on gold a lot in the coming days or weeks.

As far as crude oil, this is another one. This was a big deal on an intraday basis today. Part of that was because we had several really micro-rallies but enough to get the average retail trader excited about this. I spent a great deal of time this morning trying to taper people’s excitement because we really hadn’t broken out of a couple of key resistance points. This big distribution bar over here (on my charts at 2:23) and this momentum shift bar over here. We hadn’t really broken above those. That being said, the way we kept slapping the hands of the retail traders that were too quick to purchase, I’m looking to see if this time it is going to be different. You see over here that we got to that 10000 level and locked in my distribution bar and off we went to the downside. This time, we pushed up and consolidated for two days with two doji stars (that means a period of consolidation). What’s happened is we’ve had several of these patterns on an intraday basis where crude oil looks like it is pushing up real sharp only to turn right back around and pull back to the average retail trader stop (about 12-20 ticks). We saw a lot of that on an intraday basis.

There are certainly retail traders that are getting hurt right now in those 12-20, sometimes 30 tick, pull backs. What is going to happen is by the time that this is ready to break out above here they are not going to believe it anymore or they are not going to have any money to trade. From my perspective, that is when the best trades tend to happen. The market starts to go more in the correct direction with as few traders as possible (especially on the retail side). I’m trying to get the students to think more institutionally in the Live Trading Room.

The other thing to watch then in addition to those two things is going to be the four different stock index futures. Where my head is at with these going into tomorrow is this: normally it is a three to one scenario that is on my mind but in this case it is a two to four scenario. What I mean by that is you’ll notice that the S&P has tried to push above some key resistance as well as the NASDAQ. However, you will see that the DOW and the RUSSELL have stalled out right into that meaningful resistance (this is all marked on my charts at 4:30). What we are looking for tomorrow is to watch all four of these to see if the two push out to the upside or if the two that pushed out today come back to earth and back into the channel. In both scenarios we are going to be looking for some great trading opportunities.

I look forward to seeing you all in the Live Trading Room tomorrow morning or in the videos tomorrow night. Take care.

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